Pensioners may get a $780 Centrelink boost through one bold move
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As we age, we often find ourselves contemplating the inevitable.
While it may seem grim, planning for our final farewell can have some unexpected financial benefits.
For Australian pensioners, one strategy could not only provide peace of mind but also boost Centrelink payments.
With the rising funeral costs, pre-paying for one recently became an increasingly savvy move.
Recent figures from Australian Seniors showed that a basic burial could cost up to $18,652, and a basic cremation service could reach $5,953.
These are not small sums, and they're only expected to increase with time.
By pre-paying for your funeral, you can lock in today's prices, potentially saving thousands of dollars.
Moreover, these pre-paid funeral costs are exempt from the Age Pension assets test, which could lead to significant increases in your pension payments.
'A pre-paid funeral is essentially a lump sum of money paid to a funeral director for a set outline of costs and services, and they are typically non-refundable,' financial adviser Alex Jamieson explained.
'Centrelink for the age pension says, "Look, we won't assess those as being assets anymore." So hypothetically, if someone pays $10,000 as a pre-paid funeral cost, that would reduce their assessable assets for the asset test assessment.'
This could potentially increase pension payouts by $780 a year or $30 per fortnight.
This increase in pension is akin to a return of 7.80 per cent on your money, which is currently more than what you'd typically earn from an average term deposit.
Over approximately 13 years, the extra pension money could effectively reimburse the money spent on the funeral.
This strategy is particularly beneficial for those receiving a part pension due to the assets test.
Single homeowners could have assets up to $686,250, and single non-homeowners up to $938,250 to qualify for a part pension.
For couples, the limits are $1,031,000 for homeowners and $1,283,000 for non-homeowners.
Pre-paying for a funeral could allow people to qualify for a pension.
Dipping below the asset test limit could also grant pensioners access to additional benefits, such as reduced costs for medications and utilities.
Aside from pre-paid funerals, other strategies like using gifting provisions, spending on holidays or home repairs, or investing in funeral bonds could exempt pensioners from asset tests up to $15,500.
While buying a car or other significant assets would not improve your Centrelink position, strategic spending could make a substantial difference.
While it may feel sad to plan for your funeral, it's a move that could provide financial relief and ensure that your final send-off is taken care of without burdening your loved ones.
Have you considered pre-paying your funeral, or have you taken other steps to manage your assets in retirement? Share your stories and thoughts with us in the comments below.
While it may seem grim, planning for our final farewell can have some unexpected financial benefits.
For Australian pensioners, one strategy could not only provide peace of mind but also boost Centrelink payments.
With the rising funeral costs, pre-paying for one recently became an increasingly savvy move.
Recent figures from Australian Seniors showed that a basic burial could cost up to $18,652, and a basic cremation service could reach $5,953.
These are not small sums, and they're only expected to increase with time.
By pre-paying for your funeral, you can lock in today's prices, potentially saving thousands of dollars.
Pre-paying for funerals is considered a bold yet financially smart move, as prices of funeral services continue to rise. Image Credit: Pexels/Pavel Danilyuk
Moreover, these pre-paid funeral costs are exempt from the Age Pension assets test, which could lead to significant increases in your pension payments.
'A pre-paid funeral is essentially a lump sum of money paid to a funeral director for a set outline of costs and services, and they are typically non-refundable,' financial adviser Alex Jamieson explained.
'Centrelink for the age pension says, "Look, we won't assess those as being assets anymore." So hypothetically, if someone pays $10,000 as a pre-paid funeral cost, that would reduce their assessable assets for the asset test assessment.'
This could potentially increase pension payouts by $780 a year or $30 per fortnight.
This increase in pension is akin to a return of 7.80 per cent on your money, which is currently more than what you'd typically earn from an average term deposit.
Over approximately 13 years, the extra pension money could effectively reimburse the money spent on the funeral.
This strategy is particularly beneficial for those receiving a part pension due to the assets test.
Single homeowners could have assets up to $686,250, and single non-homeowners up to $938,250 to qualify for a part pension.
For couples, the limits are $1,031,000 for homeowners and $1,283,000 for non-homeowners.
Pre-paying for a funeral could allow people to qualify for a pension.
Dipping below the asset test limit could also grant pensioners access to additional benefits, such as reduced costs for medications and utilities.
Aside from pre-paid funerals, other strategies like using gifting provisions, spending on holidays or home repairs, or investing in funeral bonds could exempt pensioners from asset tests up to $15,500.
While buying a car or other significant assets would not improve your Centrelink position, strategic spending could make a substantial difference.
While it may feel sad to plan for your funeral, it's a move that could provide financial relief and ensure that your final send-off is taken care of without burdening your loved ones.
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